Queensland Economic Advocacy Solutions

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Latest Queensland Wages Growth

Wages growth for Queensland's private sector is now slowly starting to ramp up. Latest data by the ABS reveals:

  • Queensland wages grew by 2.3% across 2018 and compares to the decade average rate of 2.8%. National wages growth across 2018 was also of 2.3%;
  • This compares to latest inflation numbers for Brisbane of 1.5%;
  • The influence of Queensland's public sector wage rises is now starting to reside and come back to the broader trend being experienced in the State's private sector;
  • Wages growth for our State's public sector was 2.4% and compares to private sector growth of 2.3%; 
  • Pleasingly the private sector growth is the highest level of increase for the past three years;
  • Wages growth is highly linked to economic growth. The difficulty that Queensland's economy has experienced since the resources investment boom is evident in lower wages growth compared to other States;
  • For example the difference between Queensland’s average weekly ordinary time earnings and Australia’s in 2013 was $12.10. In 2018 due to lower wages growth the gap has increased to $34.90.  That is, because we have not kept up with national wages growth, Queenslanders have fallen behind to the tune of $1,185.60 each year.
  • ​The overall outlook for wages growth indicates it will continue to experience modest improvement in line with a broader improvement in the labour market.

Queensland Business Numbers Continue to Rise

The ABS have released their Counts of Queensland Businesses including entries and exits and the story in the main is a positive one for Queensland in 2017-18. 

Key points include:

  • Queensland's business population continues to increase. There are now 448,725 businesses operating in Queensland in 2017-18 up by 11,079 or 2.5% on 2016-17 (437,646);
  • Compared to other States, Queensland is mid range for percentage growth in 2017-18. NSW and Victoria are the leading States with Queensland ranked third;
  • The Queensland entry rate or the number of new businesses starting up was 67,190 or 15.4%. This is up on previous years and is a good sign of confidence in starting a business in the Sunshine State;
  • However the exit rate also rose to 13.0% in 2017-18. That is 56,717 Queensland businesses exited the economy;
  • The area of opportunity for Queensland is improving our business community's survival rate. For an existing business in 2013-14 it had only a 63.3% survival rate to 2017-18. For a business that newly established itself in 2013-14 its survival rate was 53.2% (one of the lowest survival rates in Australia); and
  • Finally 97.6% of all businesses in Queensland are a small business employing less than 20 employees.


Queensland Labor Market Summary - January 2019

Key points from the Australian Bureau of Statistic's labour market numbers for Queensland in January 2019 include:

  • Queensland's unemployment rate remains unchanged at 6.1% in trend terms and is down from 6.1% to 6.0% seasonally adjusted.
  • Nationally the unemployment rate remains unchanged at 5.1% (trend) and 5.0% (seasonally adjusted).
  • For Queensland's trend series there was an increase in total employed persons and a reduction in unemployed persons but not enough to shift the unemployment rate. In seasonally adjusted terms there was a fall in total employed persons but also a fall in unemployed persons that led to the lower unemployment rate.
  • Queensland's underemployment rate (measures those persons wanting additional hours of work) has improved in the past six months and currently stands at 8.8%.
  • Queensland's employment growth is slowly starting to improve. In trend terms there where 3,500 jobs created in January 2019 and over the past 12 months 27,700 jobs have been created.
  • Queensland's employment growth in the last six months has been largely driven by full-time positions.
  • Total hours worked in Queensland whilst flat across much of 2018 has expanded recently indicating more demand in the economy for labour.
  • As an aside NSW would now be regarded as being close to what is termed 'full-employment' with an unemployment rate at 3.9%. 

Latest Reserve Bank of Australia economic forecasts - February 2019

The Reserve Bank of Australia have released their latest Statement of Monetary Policy which contains forecasts for the Australian Economy over the next several years.  This Statement received widespread media coverage - whilst the RBA's monetary policy stance remains neutral, the next adjustment of the offical cash rate (1.50%) looks to be downwards after more than two years of expectation that the next move would be upwards

The RBA indicated that domestic economic conditions have been softer than were expected at the time of the November 2018 Statement.  As a result, the forecast for GDP growth has been revised lower. Consistent with this, the forecast for inflation has also been revised slightly lower. In summary, GDP growth is expected to be a little above trend over the forecast period and underlying inflation is expected to pick up to 2 per cent by late 2019 and to be a little higher in the following year.

The Statement can be accessed by clicking on the forecast table below.

Imprisonment for mistakes in payrolls is a step too far

“Employers found to be deliberately or recklessly engaging in wage theft could find themselves in jail, after the Palaszczuk Government accepted in principle making wage theft a criminal offence following a Parliamentary Inquiry.”

Source: Queensland Government Media Release

This is one hell of a big development in the industrial relations landscape in Queensland on late Friday last week. 

The Palaszczuk Government has tabled its response to the parliament’s Education, Employment and Small Business committee inquiry into wage theft in Queensland. In its report, the committee made 17 recommendations aimed at eliminating ‘wage theft’ and the government has accepted, or accepted in principle, all of the recommendations.

Six of the recommendations are within the Queensland Government’s jurisdiction and deal with providing better public information and education, and procurement policies that allow for action to the taken against employers that have underpaid workers.  The Committee also recommended that wage theft in deliberate or reckless cases be criminalised at a state level.  The Palaszczuk Government has indicated it will now consult with stakeholders to determine the best way to make good on this recommendation.

The inquiry found that wage theft is affecting around 437,000, or one-in-five, Queensland workers and costing more than $1 billion every year..

I do not condone the deliberate underpayment or exploitation of employees but over the best part of two decades I have seen that for every case of intentional non or under payment of an employee there would be a dozen non-intentional ones.

Many instances of incorrect payment are actually a result of misunderstanding or error.  Types of non-deliberate errors that are regularly seen are:  the application of the wrong modern award, misclassification of employees under a modern award and employers not understanding the circumstances when allowances, loadings and penalties are to apply and be paid.

The difficulty in all of this is what is considered “deliberate” or “reckless”.  This is a very poor course of action for many additional reasons as well including:

  • Last year the Federal Government introduced the Fair Work Amendment (Protecting Vulnerable Workers) Act which, amongst other thingss, increased penalties for the contravention of workplace laws tenfold;
  • The Fair Work system is ‘’highly complex’’ with workplace awards of over 100 pages that are undoubtedly challenging for small business;
  • This represents a break-away from the national Fair Work system that provides consistency across the country; and
  • Placing employers at risk of imprisonment for mathematical errors imposes a serious disincentive on setting up or continuing to run a business and employing staff.

The lot of a small business is a difficult one and the risk of imprisonment for a mistake in payroll is a step too far.

The key objective of governments in this space should be to make it as easy as possible for employers and employees to know their rights. Global evidence favours education, raising awareness and resourcing for existing enforcement mechanisms than introducing additional layers of enforcement and criminality. 

The Queensland Government would be better off working with other governments to improve the current compliance system rather than creating another ad-hoc state regime.

It is lacking in logic that the Queensland Government are indicating they are prepared to look at education and awareness initiatives subject to ‘impact on budget’ yet are prepared to reach straight for making incorrect wage calculations a criminal offence and the significant drain that frivolous cases will have on our legal system.

I would strongly urge this issue to be permanently placed on the back-burner of Government priorities.

A full copy of the State Government response to Inquiry recommendations can be found here.


Can the three tiers of Government finally work together: the SEQ City Deal

Residents of SEQ are always banging on about how the different tiers of government can never work together to fix the things that desperately need fixing. Well that may well change with the Coalition Government seriously considering supporting the SEQ City Deals proposition.

City Deals are long-term agreements between the federal, state and local governments to deliver a shared platform of investment and reform. The Australian Government has signed four City Deals in Australia since 2016 (Darwin, Launceston, Townsville and Western Sydney) and a further four more are currently under negotiation (Adelaide, Geelong, Hobart and Perth).

The SEQ City Deal provides six transformational opportunities:

  • 45-minute region: Build on Cross River Rail and Brisbane Metro to move SEQ towards a 45-minute region by delivering the next wave of Rail and Metro projects to connect our key activity and growth centres.
  • Liveability Fund: Deliver and secure better open spaces, recreational areas and landscapes for our growing region, including through a new tripartite Liveability Fund to invest in critical blue and green infrastructure.
  • Trade and Enterprise Spine: Supercharge an SEQ Trade and Enterprise Spine between the Toowoomba Trade Gateway and the Australia TradeCoast by connecting Inland Rail to the Port of Brisbane and unlocking new jobs in the south-west and western growth areas.
  • Regional Coordination Board: Deliver greater coordination and collaboration between federal, state and local governments, including a new tripartite Regional Coordination Board  to support strategic governance for the region.
  • Innovation Precincts: Ignite our nationally signi cant Innovation Precincts to deliver more high-value, knowledge- intensive jobs through enabling-infrastructure and a culture of innovation and entrepreneurship.
  • Smart Digital Region: Establish SEQ as Australia’s leading Smart Digital Region by leveraging the new International Broadband Submarine Cable to deliver a Digital Trade Hub and taking a region-wide approach to data and digital connectivity.

The SEQ City Deal could potentially represent a rare and fantastic example of the three tiers of government working together with business, property and the broader community to boost our economy by a considerable $58 billion over 25 years.  This number was put together by KPMG (2018) after modelling the impact of a 0.25% increase in annual multi-factor productivity growth across the SEQ regional economy.

Given the higher productivity and flow impacts across the broader economy, the modelling estimated that the SEQ economy may be larger by up to $58 billion in 25 years (2017 dollars). Australian Bureau of Statistics estimates show that multi-factor productivity has grown by 0.73% per annum on average between 1994–95 and 2017–18. Over the same period, NSW multi-factor productivity growth has averaged 0.97%. The potential 0.25% increase in multi factor productivity used in the analysis was based on the impact required to close the historical multi factor productivity gap with NSW.

The actual impact of a City Deal on multi factor productivity will be dependent on the final terms of the deal struct with the Australian Government.

Given that a Federal Election is only months away I would wager that a SEQ City Deal will enjoy bipartisan support.  This is why I love elections …….. they are a wonderful opportunity to get a politician to do something useful. Putting this tongue in cheek aside, all those who worked on this deal should be congratulated. It represents a wonderful opportunity that will lift the standard of living in SEQ for decades.

Information on the SEQ City Deal can be found here

Does Queensland have a debt problem?

At the end of 2018 when the Mid-Year Fiscal and Economic Review (MYFER) was released there was considerable debate over whether Queensland has a debt problem.  So to kick off 2019 I thought QEAS might have a look at this important issue. It is an important issue because if we leave debt to spiral out of control we are essentially leaving a liability for our children and future generations to bear.

In looking at the headline dollar values they appear to be quite concerning.  Both ‘General Government’ and ‘Public Sector’ (both general government and government owned corporations) debt peaked in 2014-15 then stabilised across subsequent years but have again commenced rising from 2018-19 and across the forward estimates peaking at $83.5 billion in 2021-22 for Queensland’s public sector. That’s an impressive number!

However as most of us will know, either in business or in our private lives, when we borrow money one of the first questions a lending institution will ask us is what is our income? That is, they want to know what capacity we have to pay off the debt.  The quantum of debt in many respects is irrelevant it is all about what capacity we have to pay off the debt. Certainly the credit rating agency’s such as Moody’s and Standard and Poors pay particular attention to the 'debt to revenue ratio' as it is a key measure of the sustainability of a jurisdiction’s debt levels.

In this context QEAS has looked at Queensland’s debt to revenue ratios and they are very enlightening. 

Based on this metric Queensland’s debt more realistically hit its peak in 2012-13 and progressively came down across the period to 2017-18 but has again started to rise from 2018-19. However, both Queensland’s general government (56.3) and public sector (107.6) debt to revenue ratios in 2018-19 remain well under the peak of 90.7 and 140.5 respectively. By 2021-21 the general government ratio will be 69.0 and the public sector ratio will be 118.9 but again well under the peak in 2012-13.

In responding to concerns about Queensland’s debt levels the State Treasurer, The Hon Jackie Trad, said Queensland is no different to other States asuch as Victoria and New South Wales who are actively increasing their debt levels to fund infrastructure.

QEAS fact checked this in the context of the debt to revenue ratio and here is where some concern lies. Indeed Queensland is moving in unison with both NSW and Victoria in taking on more debt, however, when contrasting the debt to revenue ratios we can see contextually how Queensland is more exposed.  In respect to the General Government debt to revenue ratio, Queensland’s (56.3) is well above NSW (42.7) and somewhat above Victoria’s (53.2). 

However the real problem lies with our Public Sector debt to revenue ratio that credit rating agencies pay most attention to.  Queensland’s ratio (107.6) is an eye watering 37 to 38 percentage points above that of NSW (70.0) and Victoria (69.7). This is reflective of the shifting of debt to GOC’s that occurred in the 2015-16 State Budget and our GOC’s already owing significantly more money. This is still a problem for the State Government as they own the GOCs and are ultimately responsible for that debt as well as their own.

At present Queensland’s credit ratings are Aa1 (Moody’s) and AA+ (Standard and Poors) and contrast to Aaa and AAA ratings for both NSW and Victoria. In short, if Queensland is serious about getting our ‘triple A’ credit rating back we would need a public sector debt to revenue ratio coming back to below 90%.  That is the Queensland Government and its GOCs would need to pay down approximately $11 billion worth of debt.  In the current context of booming mining royalties already spent I think a more realistic target for the Queensland Government would be to keep the public sector debt to revenue ratio at 2017-18 levels across the budget cycle.

To summarise four clear points should be noted:

  • Consideration should be given to the 'debt to revenue ratio' rather than the headline dollar value of debt.
  • Queensland’s debt to revenue ratio for both the State Government and Public Sector is again on the rise following a moderation over recent years.
  • Queensland is carrying a significantly higher amount of debt compared to both New South Wales and Victoria who have ‘Triple A’ credit ratings. 
  • Our State's debt burden is considerably exacerbated by the high amount of borrowings by our Government Owned Corporations.

QEAS response to the Financial Services Royal Commission

A brief summary for business:

According to Commissioner Hayne the chief protection for small business borrowers has for some time been, and remains, the Banking Code.  Among other things, the Banking Code provides that, if a lender is considering providing a borrower ‘with a new loan, or an increase in a loan limit’, the lender will ‘exercise the care and skill of a diligent and prudent banker’.

Accordingly there are two key recommendations Commission Hayne has made that impact small business.

Firstly the National Consumer Credit Protection Act 2009 Act should not be amended to extend its operation to lending to small businesses.

However and secondly, the Australian Banking Association should amend the definition of ‘small business’ in the Banking Code so that the Code applies to any business or group employing fewer than 100 full-time equivalent employees, where the loan applied for is less than $5 million.

The context is this and it is quite important. Commissioner Hayne primarily believes the responsible lending issues identified during the Commission’s hearings will be resolved by banks applying the law as it stands.

The changes he recommends in relation to lending to small businesses are underpinned by two broader changes: one directed to improving the ways in which banking products work – by introducing a responsibility for product design, delivery and maintenance into the Banking Executive Accountability Regime (BEAR); and the second directed to making the promises made in the Banking Code more meaningful – by introducing statutory consequences for breaching key provisions of the Code.

QEAS thoughts here:

The biggest indication of what will happen for the immediate future of the Australian banking sector will come from how the Australian Labor Party responds to the Financial Services Royal Commissions’ recommendations.

This may have all the importance of a being a Royal Commission but in some respects it is just another report with recommendations. It will be how Government and more importantly the next Government responds to the Commission’s Final Report.  Both sides have immediately indicated that they will accept all 76 recommendations and take action on them (The Government's formal response can be found here). It is the actioning of these initial responses that will determine whether a real fix ensures that the litany of poor behaviours identified in Australia’s financial services industry will not be allowed to ever occur again.

Both the Coalition and the Opposition will have to strike the right balance between responding to the Commission’s recommendations but not to the extent where it tightens lending requirements that is counter productive to the economy and broader community.  Such a balance will no doubt focus on enforcing the existing laws as recommended by Commissioner Hayne.

As tempting as it will be to play politics the Federal Opposition has a chance to step up for the people of Australia.  They have an opportunity to rise above political point scoring and deliver well before a 'term in office'.

​The Final Report can be accessed here:

Modest increase in Brisbane CPI for the December Quarter 2018

Brisbane's CPI rose by a modest 0.5 per cent in the December Quarter 2018 and by 1.5 per cent over the year to the December quarter 2018.  This increase is down from the 1.8 per cent in the 12 months to the September quarter 2018. Given that there is correlation between economic activity and the CPI, the modest result for Brisbane is indicative of growth in our economy remaining below trend.

Nationally CPI rose 0.5 per cent during the quarter, compared with a rise of 0.4% in the September quarter 2018 and it rose 1.8 per cent over the twelve months to the December quarter 2018, compared with a rise of 1.9 per cent over the twelve months to the September quarter 2018.

The All groups CPI rose in all eight capital cities over the 12 months to the December quarter, with Hobart (+3.0%), Canberra (+2.5%), and Melbourne (+2.0%) recording the largest movements.  

The main contributors to the rise in Brisbane's CPI in the December quarter were: tobacco (+9.9%), domestic holiday travel and accommodation (+4.7%) and electricity (+4.0%). The rise was partially offset by a fall in automotive fuel (-3.3%) which was the second largest fall across all capital cities.

As an aside the latest CPI confirms why many Queensland households are feeling cost of living pressures. The top 20 components that have increased the most over the past decade comprise of every day living essentials.

Finally, I can understand audio visual and computing equipment decreasing in price over the past decade - but milk decreasing in price by nearly 20 per cent is a national disgrace.


Queensland labour Market Summary - December 2018

There are five main points to note about Queensland's labour market for the month of December 2018:

  1. Queensland’s unemployment rate was steady at 6.2% in trend terms and down from 6.3 to 6.1% seasonally adjusted. Compares to 5.0% nationally (both trend & seasonally adjusted);
  2. Queensland has the second highest unemployment rate (6.1%) of all States, 1.1 per cent higher than the national average at 5.0%;
  3. The gap between Queensland's (6.1%) and Australia's unemployment rate (5.0%) has progressively opened up since mid 2017;
  4. However the good news is that Queensland's employment is now starting to rise again, up 6,000 jobs in December 2018 in trend terms and 11,600 jobs in seasonally adjusted terms; and
  5. The rise in Queensland jobs over recent months has mainly been as a result of full-time positions.


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